In: Finance

Problem 11-06 New-Project Analysis The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $880,000, and it would cost another $19,000 to install it. The machine falls into the MACRS 3-year class (the applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for $566,000. The machine would require an increase in net working capital (inventory) of $20,000. The sprayer would not change revenues, but it is expected to save the firm $366,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 35%.

a. What is the Year 0 net cash flow? $

b. What are the net operating cash flows in Years 1, 2, and 3? Do not round intermediate calculations. Round your answers to the nearest dollar.

Year 1 $

Year 2 $

Year 3 $

c. What is the additional Year 3 cash flow (i.e, the after-tax salvage and the return of working capital)? Do not round intermediate calculations. Round your answer to the nearest dollar. $

d. If the project's cost of capital is 15 %, what is the NPV of the project? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Should the machine be purchased?

Problem 11-06 New-Project Analysis The Campbell Company is
considering adding a robotic paint sprayer to its production line.
The sprayer's base price is $1,130,000, and it would cost another
$21,000 to install it. The machine falls into the MACRS 3-year
class (the applicable MACRS depreciation rates are 33.33%, 44.45%,
14.81%, and 7.41%), and it would be sold after 3 years for
$502,000. The machine would require an increase in net working
capital (inventory) of $15,500. The sprayer would not change...

Problem 11-06 New-Project Analysis The Campbell Company is
considering adding a robotic paint sprayer to its production line.
The sprayer's base price is $1,130,000, and it would cost another
$21,000 to install it. The machine falls into the MACRS 3-year
class (the applicable MACRS depreciation rates are 33.33%, 44.45%,
14.81%, and 7.41%), and it would be sold after 3 years for
$502,000. The machine would require an increase in net working
capital (inventory) of $15,500. The sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,090,000, and it would cost another $18,000 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $551,000. The machine would require
an increase in net working capital (inventory) of $11,000. The
sprayer would not change...

Problem 11-06 New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line.
The sprayer's base price is $870,000, and it would cost another
$18,000 to install it.
The machine falls into the MACRS 3-year class (the applicable
MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%),
and it would be sold after 3 years for $504,000.
The machine would require an increase in net working capital
(inventory) of $19,500. The sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$870,000, and it would cost another $22,000 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $659,000. The machine would require
an increase in net working capital (inventory) of $11,500. The
sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,020,000, and it would cost another $18,000 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $612,000. The machine would require
an increase in net working capital (inventory) of $9,500. The
sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$910,000, and it would cost another $20,500 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $688,000. The machine would require
an increase in net working capital (inventory) of $17,000. The
sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$980,000, and it would cost another $22,000 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $626,000. The machine would require
an increase in net working capital (inventory) of $9,500. The
sprayer would not change...

Problem 11-06
New-Project Analysis
The Campbell Company is considering adding a robotic paint
sprayer to its production line. The sprayer's base price is
$1,000,000, and it would cost another $22,500 to install it. The
machine falls into the MACRS 3-year class (the applicable MACRS
depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%), and it
would be sold after 3 years for $624,000. The machine would require
an increase in net working capital (inventory) of $18,000. The
sprayer would not change...

Problem
11-6
New-Project Analysis
The Campbell Company
is considering adding a robotic paint sprayer to its production
line. The sprayer's base price is $820,000, and it would cost
another $16,500 to install it. The machine falls into the MACRS
3-year class (the applicable MACRS depreciation rates are 33.33%,
44.45%, 14.81%, and 7.41%), and it would be sold after 3 years for
$691,000. The machine would require an increase in net working
capital (inventory) of $14,000. The sprayer would not change...

ADVERTISEMENT

ADVERTISEMENT

Latest Questions

- C++ program Dairy Farm decided to ship milk in containers in the form of cubes rather...
- Explain RAID 10 and its importance?
- in the documentary Trapped, what are the restrictions placed on the right to abortion? (including the...
- Cross City Tunnel (CCT) Ltd currently has 5 million shares on issue each with a market...
- Data Structures and Algorithms CMPS 2720 PLEASE ANSWER CLEARLY 10. Suppose a dataset has N items....
- Define the Central Limit Theorem. How are confidence intervals related to public opinion polling?
- Task Description Task No. Must Follow Expected time(days) Reserve the meeting room A

ADVERTISEMENT